No savings? No problem. If you’re ready to stop renting and get into a home of your own then it’s completely achievable, even if you’ve got nothing saved up. With a little help from your family and something called a guarantor loan you could be moving into your new home sooner than you’d think.
How do they work?
If your folks have a home then it’s possible to use it as security on your home loan. This is a great option for first home buyers or if you’ve had bad luck with your finances in the past. A guarantor loan will let you borrow up to 100% of the purchase price of your new home and will let you avoid paying Lenders Mortgage Insurance (LMI), which could save you thousands!
A guarantor loan uses some of your guarantor’s home equity as extra security for your home. Your guarantor will not be required to make payments on your loan, unless you can’t keep up with your repayments on time, then your lender can turn to your guarantor. We can help you find out what you can comfortably afford and qualify for.
Can anyone be a guarantor?
Usually a guarantor will be your parents or your spouse, but in some cases lenders may allow extended family like aunts and uncles or your grandparents to act as your guarantor. You may also be able to ask a sibling or in-law to help you out.
Can I change my guarantor?
Some lenders may allow you to change your guarantor after you have gotten approval for your loan, but this will require them to reassess your loan and your new potential guarantor. Other lenders may not allow changes to your guarantor, but it may be possible to refinance your loan and remove them. Most lenders will require you to have paid off 20% of your home’s value before you can remove your guarantor, so it’s important that your guarantor understands the commitment involved in helping you to get a loan.
What are the benefits for homebuyers?
One of the big benefits of a guarantor home loan is the extra security that a guarantor provides. It means that you’ll be able to get a home loan with a much smaller deposit and avoid expensive lenders mortgage insurance. With a guarantor home loan you could be on the fast track to owning your own home.
Ready to escape renting?